Sacramento streetcar rolling fast, but financing questions unanswered

Rendering of proposed Old Sacramento Station with two streetcars and Tower Bridge in the background, part of a proposed Downtown/Riverfront Streetcar project linking West Sacramento and Sacramento.
Charles Hales
Portland-based HDR, Inc.

Rendering of proposed Old Sacramento Station with two streetcars and Tower Bridge in the background, part of a proposed Downtown/Riverfront Streetcar project linking West Sacramento and Sacramento.
Charles Hales
Portland-based HDR, Inc.

Sacramento’s streetcar plan has chugged along quietly for years. But in the past month, the ambitious proposal has taken off like a bullet train.

Saying the moment to strike is now, officials on both sides of the Sacramento River are pushing hard for $75 million from the federal government to help build a 3.3-mile trolley system that would roll past some of the urban core’s most notable landmarks. That lobbying effort is underway even though advocates have yet to solidify millions of dollars in necessary local matching funds and are uncertain about some of the project’s costs.

Their haste has prompted members of a watchdog group to complain about the lack of full public vetting over whether streetcars are needed and whether they will create the economic boon to downtown and West Sacramento that advocates project.

Despite such concerns, the project appears to be gaining support from many of the major downtown businesses and property owners who are being asked to vote over the next three weeks on whether to set up a streetcar financing district and pay taxes to fund $30 million in construction funding.

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The vote count won’t be tallied until mid-February, likely after federal officials announce their transit funding intentions for the next fiscal year. But by launching the vote last week, streetcar advocates hope to signal that Sacramento is committed to bringing local private investment money to the table.

“We have to put our chip on the table right now,” said Sacramento city planner Fedolia Harris, a member of the streetcar project staff.

The streetcar project, a cooperative effort among Sacramento, West Sacramento, local transit agencies and regional transportation officials, is being billed as a dramatic new civic amenity that would boost economic development downtown, get cars off the street and help make the central core more vibrant by attracting business investment along the rail line.

The electric streetcars would roll on rails at a leisurely pace, sharing lanes with cars on J, K, L and other major downtown streets. Possibly offering $1 rides, the modern trolleys would deliver tourists, workers, downtown residents and others to Raley Field, City Hall and the new Bridge District on the West Sacramento waterfront. Crossing the Tower Bridge, streetcars would roll past Old Sacramento, the downtown railyard, the Capitol, Sacramento’s convention center and several hotels, as well as along K Street and past the NBA arena under construction downtown.

The price tag has been set at $150 million. The Sacramento City Council two weeks ago committed $7 million, the same night the council signaled its approval for asking downtown property owners to contribute $30 million. West Sacramento has committed $25 million.

A critical question is whether the federal government will chip in $75 million. Rep. Doris Matsui of Sacramento, one of the project’s proponents, said she has been “doing everything possible to ensure the (Federal Transit Administration) sees the big picture and the progress that has been made in securing local funding.”

Officials say they will make their pitch again next year if they don’t get approval this time, but developer and Sacramento Kings part-owner Mark Friedman said he thinks now is Sacramento’s best option. “If we don’t step forward now, we’re going to face a much more competitive environment moving forward,” Friedman told a business group during a lobbying pitch last week.

Some 30 cities are requesting money from the Federal Transit Administration’s “Small Starts” bus and rail grant program, according to a federal website. As of now, four of them are proposing streetcars: Tempe, Ariz.; Fort Lauderdale, Fla.; Seattle; and Los Angeles. It’s uncertain whether any of those four are far enough along in their plans to win money this year.

Sacramento’s property owner vote is one of several elements of its financing plan that remains uncertain. The property owner vote, in fact, is only advisory. A second, official vote of registered voters living near the proposed streetcar line likely will be taken later this spring.

The state also has not yet approved a request that it commit $10 million for construction, and Sacramento County has not formally agreed to contribute a requested $3 million. Nor have streetcar proponents come up with an additional $17 million needed to move light-rail trains off K Street and onto H Street, a move that some downtown property owners insist on in exchange for their support of the streetcar. The trolleys would run down K Street from the arena to 12th Street.

Streetcar planners say they have not nailed down how much annual operating expenses would be, or where all operating funds would come from. Advocates have identified about $2 million in potential annual operating funds – from projected fare-box revenues, advertising and an existing West Sacramento streetcar tax – but operating costs could be twice that amount, Harris said.

Harris said planners hope to finalize that financing in the next few months. He said it was premature to comment on where the additional money might come from. Critics with the Eye On Sacramento taxpayer advocacy group say in a recent report that budget questions are worrisome, and note that some cities have faced financing problems.

Regional Transit went millions of dollars over budget on a downtown light-rail project a few years ago when it ran into unmapped utilities under city streets, as well as the remains of an American Indian village. The delays caused the head of RT at the time to say the agency was “perhaps naive” about the complications of working on downtown streets.

Seattle and Tampa have run into financial issues with their systems. In Texas, Austin and San Antonio recently backed away from rail plans. But a handful of other cities are building or studying streetcar plans, according to the American Public Transportation Association. Portland, Ore., the city that helped create the national streetcar resurgence in 2001, is adding a third line to its already muscular downtown system. See Portland streetcar gallery here.

David Taylor, a Sacramento high-rise developer, said he was skeptical about the project until he toured Portland’s system, talked to business leaders there and reviewed an analysis of the potential economic boost streetcars could deliver. That report, provided by Strategic Economics, projected a streetcar would speed development of the downtown railyard and West Sacramento’s Bridge District, and lead to higher property values for existing buildings.

“I was clearly on the fence and disinterested,” Taylor said. “Now I am a full-on proponent.”

Other downtown property owners have doubts. Chuck Benson, who runs a market-research firm on H Street, said he does not believe the streetcar would bring any financial benefits to his business. He had not received his ballot yet and did not know how much his annual tax would be.

“I don’t see an economic impact on my business from this proposal,” he said. “Those who receive benefits should be the ones to pay for it.”

The debate over economic benefits and streetcar financing has been ongoing nationally for years. Retired Florida State University urban planning professor Gregory Thompson, who chairs the Transportation Research Bureau light-rail committee, said his sense is that streetcars don’t bring much of an economic boost to cities, and that Sacramento’s would not be the performer some locals believe. “If the feds stop providing money, I don’t see any more of them being built.”

But Rep. Matsui said the streetcar is part of her vision for a downtown with amenities that attract young professionals, residents and further investment.

“I’m confident this is the right fit for us,” she said in an email. “Building a streetcar system, expanding light rail, and finishing the (downtown railyards) intermodal transit center (are) essential to the future of our downtown core. Continuing to build out our public transportation options will help both downtown and the region reach its full potential.”

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